Inventory/ Understanding Stock Item Costing
How Is Stock Item Costing Calculated?
The system uses Weighted Average Cost as the method of calculating Ending Inventory cost. It takes Cost of Goods (Stock Items) available for Sales and divides it by the total quantities of the goods. This gives a Weighted Average Cost per Unit.
Purchasing 1st Batch Of Printer At $180
Location
Purchase> Supplier Invoice
Action
> Click PURCHASES activity
> Click SUPPLIER INVOICE module
> Click NEW
> VENDOR select (or create)
> In-Time Supplier Pte Ltd
Details:
> ITEM select HP Printer
> QTY enter 10
> UNIT PRICE enter 180
> TOTAL check for 1,962
> Click ADD
$1962 is after GST.
Check If Unit Printer Cost Is $180
Location
Report>Inventory> Stock
Action
> Click INVENTORY
> Click STOCK module
> Click REFRESH
> UNIT COST check for 180
> COST check for 1,800
Purchasing 2nd Batch Of Printer At $210
Location
Purchase> Supplier Invoice
Action
Click NEW
> VENDOR select (or create)
In-Time Supplier Pte Ltd
Details:
> ITEM select HP Printer
> QTY enter 5
> UNIT PRICE enter 210
> TOTAL check for 1,144.50
> Click ADD
Check If Unit Printer Cost Is $190
Location
Report> Inventory> Stock
Action
> Click REFRESH
> UNIT COST check for 190
> COST check for 2,850 10sets @ $180 = $1,800
5sets @ $210 = $1,050 Weighted Average Cost (WAC)= ($1,800 + $1,050) / (10sets +5sets) = $2,850 / 15 = $190
Different Cost Allocated When Selling Of Stock Item At Different Period
Location
Sales> Invoice
Action
Select the same Invoice
> Click EDIT
> Click GL
> ACCOUNT check for
Cost of Goods Sold is 950 Cost of Goods Sold @ $190 x 5 = $950
> Close General Ledger module
> Click UNDO for Invoice
Selling 5 Sets Of Printer In Period 1
Location
Action
> Click SUPPLIER INVOICE module
> Click NEW
> VENDOR select (or create)
In-Time Supplier Pte Ltd
Details:
> ITEM select HP Printer
> QTY enter 5
> UNIT PRICE enter 205
> TOTAL check for 1,117.25
> Click ADD
Buying 5 Sets Of Printer At $195
Location
Action
> Click REFRESH
> UNIT COST check for 195
> COST check for 2,925
10sets @ $190 = $1,900
5sets @ $205 = $1,025 WAC = ($1,900 + $1,025) / (10sets +5sets)
= $2925 / 15 = $195
Selling 5 Sets Of Printer In Period 2
Location
Sales> Invoice
> Click SALES activity
Action
> Click INVOICE module
> Select the previous invoice
> Click DUPLICATE
> TOTAL check for 1,605
> Click ADD
Location
Sales> Invoice
Action
> Select the same Invoice
> Click EDIT
> Click GL
> ACCOUNT check for Cost of Goods Sold is $975
> Close General Ledger module
> Click UNDO for Invoice
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